Our new combined retirement and healthcare conference successfully launched in San Francisco!
Filed under: Health/Welfare Plans, Retirement Plans, Uncategorized |
Leave a Comment What a week in San Francisco! I had been waiting with baited breath for the launch of the Mid-Sized Retirement and Healthcare Plan Management Conference. Our new format—which combined the individual retirement and healthcare programs we’ve run for 20 years—seems to have hit on all cylinders. We are very proud!
For those of you who have attended our prior conferences, rest assured that the educational base of these programs has not changed. Through our own research and that of others we have spoken with, we learned there was a lot of interest in being able to attend a single program that would deal with issues in both of these benefit areas.
There was a strong mix of sessions on retirement plan management and health/welfare plan issues. The first three keynote sessions focused on the retirement plan world, while the next two were healthcare based. The issues were wide ranging, with an overlap from some of the behavioral finance topics. (For instance, inertia is a difficult issue to overcome in both retirement plans and healthcare programs, and there were plenty of examples of ways plan sponsors can combat that problem.)
The Supreme Court hearings on the healthcare laws were also widely discussed. Although no one can say for sure what the outcome will be, as you’d expect there is a great deal of interest and divergent opinions. I joined in a number of discussions during our networking sessions on this debate…wine definitely helped!
There was also a pretty strong interest in the 408(b)(2) and 404(a)(5) fee regulations. It will be interesting to see what happens when the first set of reports from the new regulations start getting delivered to plan sponsors in July.
Our keynotes got off to a very strong start, with Gerry Mullane, a Principal at Vanguard’s Institutional Investor Group, delivering our opening address. Gerry’s topic was Benchmarking Trends in DC Retirement Plans. He previewed some data that will be included in Vanguard’s 2012 How America Saves market research report. Gerry has an incredible grasp of the information contained in the reports. Particularly revealing was information that showed that although auto-pilot programs are very effective, they can have the unwanted effect of lowering overall contribution rates if they are designed improperly. This is a very important piece of information for plan sponsors to keep in mind to make sure they are implementing auto-pilot programs correctly.
(If you’re a market research junkie like I am, you really owe it to yourself to read Vanguard’s reports. Although the 2012 version won’t be out until June, prior versions are available on their website.)
Following the morning workshops, Vince Giovinazzo gave the lunchtime keynote address on Plan Design Inflection Points: Enhancing Participant Outcomes. Vince is the CEO and founder of 401(k) Advisors. I’m very proud that Vince said that I was only the third person ever to pronounce his name correctly when introducing him. (OK, I admit, I messed it up during my morning introductory comments, but at least I got it right the second time around!) Vince’s talk was right on point. He used a number of different references to illustrate various strategies for getting employees to participate—and how to get them to participate at reasonable contribution levels. Experts—including Vince—say that a 12-15% contribution (employee & employer) is a reasonable level for people to save if they expect to be able to accumulate enough funds for a comfortable retirement. If employees are starting late, that number probably needs to be even higher.
Tuesday morning opened with David Gray from Charles Schwab. (I love David’s title—Vice President of Client Experience!) David completed our keynote journey around the retirement plan world with his presentation titled “Evolving the 401(k) Plan.” David first took us on a look back through the old days of balance forward accounting and defined benefit plans and walked us through DC plan history up to today’s plans. He gave his thoughts as to how ETFs and index funds may play a significantly bigger role in DC plan investment lineups in the future.
At lunch on Tuesday, Dr. David Kaplan, a partner with Mercer, gave an overview on How We Make Choices. This session covered topics relevant to both retirement plans and health/welfare programs, and provided numerous examples based on behavioral finance studies. David showed how too many choices can confound participants, and although choice may sound like a good thing on the surface, it can actually induce unwanted behavior.
Finally, on Wednesday morning, Jerry Frye, the founder and President of Benefits Services Group, provided our closing keynote, Change Before You Have To: Use Strategic Data Analytics to Drive Your Company’s Success. I’ve known Jerry for many years, and on more than one occasion he has been described as “a benefits rock star.” Jerry knows more than anyone I’ve ever met about the operations of the U.S. healthcare system and the ways that patients’ journeys through the healthcare system are frequently mismanaged. This of course has a direct impact not only on the life of the patient but in the expenses that their healthcare program will have to bear.
In addition to the keynotes, we received great feedback about our workshops. There were 44 breakout sessions split between healthcare and retirement plan issues. They covered just about anything participants wanted to explore in greater detail on just about any topic you could think of.
I don’t believe it’s a stretch to say everyone left exhausted; it was a pretty intense two and a half days. From the evaluations we’ve received, participants definitely thought it was worthwhile and that the new format was structured just about exactly right.
I want to again thank all who attended, and a special thanks to all our sponsor partners in these programs. We love hosting these and we learn from our attendees every program we run. We are incredibly fortunate to have such a loyal group of alumni and sponsors.
I look forward to seeing many more of you at our next program in Chicago, June 5-8. Until then, I’ll be posting on this blog. Feel free to leave a comment through the blog or to contact me via email.
Mark Friedman
Conference Chairman
PS For those of you who saw the pictures of the pigeons perched atop the tv in my hotel room, a reminder…close those sliding doors when you leave a room!
Hopes for 2012
We have now turned the corner on a new year, and I thought it would be interesting to take a look at a few things we can hope for in 2012, both for retirement plans and health & welfare programs.
In the retirement plan world, I hope that we can start to feel that we are back to “normal” again as far as the investment markets are concerned. This “new normal” that we have been operating in for the past few years is, quite frankly, terrifying. “Normal” to me simply means investment markets that people can have faith in, not an environment where people are constantly worrying if the other shoe is about to drop. (I’m not even sure there’s a shoe left! 2008 and 2009 certainly had more shoes drop than I own.)
I don’t think it’s a stretch to hope for some level of certainty with the financial markets. We never truly had certainty in the markets, but at least people had a belief that over the long-term, following sound investment principles would lead to positive returns. The volatility we see as part of our current “new normal” doesn’t instill confidence in anyone.
In the past, you believed that if you invested in solid companies you normally would see positive returns. If you diversified your funds appropriately, you would be mitigating some level of risk. If you saved, compounding would help you build up a nest egg and your funds would grow faster than the ravages of inflation could eat it away. Most people I speak to today indicate that their participants have real doubts that these principles hold in today’s world. That’s a real problem.
I can tell you, I never thought I’d open a conference the way I did at the Mid-Sized Retirement and Pension Plan Management Conference in Chicago last October. It went something like this: “Headlines today indicate that our markets are expected to be extremely volatile waiting for a vote from about the European debt restructuring.” Nothing at all against Slovakia, but how can we expect our participants to have confidence in the investments we make available to them if they are constantly hearing things such as this and seeing its impact on our markets? Participants are very tuned into the news media, and see headlines constantly that they can’t fathom. If they feel that situations are beyond their control, very often they retrench. This can be catastrophic for long-term savings.
I’d love to see 2012 as a period where the “old normal” returned, and our participants can have confidence in their ability to save for retirement through the programs that we all work so hard to bring them.
On the healthcare side, my hope is much simpler. I hope we see some clarification on our laws. I’m not staking out a position on one side or the other of the healthcare reform debate here in this blog. As plan sponsors, we want to know what the laws are going to be that govern our plans! If PPACA stays, fine, we will be able to move forward with all its provisions. If PPACA falls, or is partially overturned, fine, we will move forward with those implications. But not knowing what the law will be—we can’t keep going on like that! Let’s get this all decided and move on.
As I’ve said in our conferences many times, most of what we have to do as plan sponsors is the same regardless of what happens with PPACA. Unless your company plans to get out of employer sponsored healthcare entirely, the fundamental issues we face remain the same. We need to continue to focus on: drivers of healthcare costs that we can have some influence over, primarily the health of our participants; proper use of the healthcare system and compliance with medical protocol; and make sure that the plans we have in place are being utilized as intended. These are the areas that can have a profound impact on the total healthcare spend for a company, and remain exactly the same with or without PPACA. There is absolutely no reason to wait and see what happens with the law to start looking at how each of these areas could affect your plan. Putting it more bluntly, holding off on decisions that could help optimize your healthcare plan in order to see what ultimately happens with PPACA is a mistake.
A final note. The “offseason” between the last conference we host one year and the first conference of the following year always feels like an eternity for me. We are in that period right now. This offseason has certainly not been one where we’ve been sitting idle. As you probably know, we’ve restructured our conference format for 2012 to incorporate both healthcare and retirement plans into a single program. Ever since we began offering educational conferences more than 20 years ago, we’ve always tried to listen to our participants and bring them programs that are tuned to their needs. Our new format is based on overwhelming response we’ve had from people.
Fortunately, modern technology has given us the ability to stay in touch between programs via means such as this blog. Now that the year has turned, I plan to have an entry at least every other week. If there are developments in either the healthcare world or the retirement industry, I’ll get my thoughts out to you as soon as events occur. We’re also looking at other ways that we can expand our social media presence, maybe even figuring out how I can use the Twitter handle I’ve set up for myself.
Although March 18, when our San Francisco Retirement and Healthcare Plan Management program opens is only a couple of months away, we can’t wait. See you soon…and until then, keep in touch!
Please feel free to add your comments, as well as hopes for the new year.
It seems like déjà vu all over again
Filed under: Retirement Plans | Tags: 401K, financial crisis, Pension, retirement
Leave a Comment After a period of relative stability and rising stock prices, the bottom seems to have fallen out. Again. I sometimes feel I need to contact a personal injury lawyer regarding the whiplash that’s resulted from watching prices dive down, roar back up, etc., often for reasons you just can’t figure out. Most personal investors never expected that they would be on such a wild roller coaster ride. Certainly for participants in retirement plans, this can be at best discouraging and at worst disastrous. Since this is not unchartered territory any longer, it’s worth looking back to see what we have learned.
The recollections of our Mid-Sized Retirement & Pension Plan Management Conferences that were held in the depths of the downturn, October, 2008, and March, 2009, are so clear it seems like it was just yesterday. Those were smack dab in the middle of some of the scariest financial times any of us have ever experienced. The speed of the changes that took place was breathtaking. We went from discussions of a possible recession into fears of the next Great Depression nearly overnight. We were knee deep getting ready for our upcoming conferences, but knew it was no longer “business as usual.” We scrambled to make sure we covered every possible topic that could give plan sponsors strategies for handling the situations they faced.
At the October, 2008, program in Chicago, people were in shock. Financial services providers—some of the top names that we grew up with—were facing the very real prospect of going out of business. People were speculating that they might go to an ATM and the machines would be empty. Money markets were faced with the issue of falling below the $1 price.
Then things seemed to stabilize a little…just before the next bottom, March 2009. Retirement plans were also beginning to see significant backlash, a great deal of which was skewed or unwarranted. The “death of the 401K” was being trumpeted by news magazines. Even 60 Minutes and Congress jumped into the fray. Again we had to scramble to address the latest situations as we prepared for our San Francisco conference, particularly since administrators were now facing participants who had seen dramatic drops in their retirement plan balances, had been studying the news reports and wanted answers.
Amongst all the discussions, some of the best strategies evolved from very practical guidance and principles.
- Follow your procedures. Many plan sponsors had been unprepared for both the speed and the depth of the market crash. Plans should have procedures in place for handling emergencies. If you haven’t yet gone through that process, you should so you don’t get caught again in the future. Make sure whatever procedures you have in place are followed. Do you call an emergency meeting of the investment committee? Do you trigger an automatic review of underlying investments if certain thresholds are met, such as a 20% drop in equity levels? Do you discuss the issues that are going on with employees? If so, how? Is there something that triggers a review of one or more of your providers? If for some reason you feel you need to do something differently, document what you are doing and the reason. Also, make sure you…
- Don’t panic! That’s far easier said than done. After all, every one of us who manages a plan is also a participant in that plan and we have our own uncertainty over what to do with our accounts. Times like these are times for leadership. Your participants
are counting on that. Don’t be surprised if there are people who are angry, sad or bewildered. For many, they are seeing their largest single asset get fall dramatically in value. With the advent of technology, they can now see that in near real-time.
While you may want to say things to people that help them through this, remember… - Don’t inadvertently become a financial adviser. Know what you should say and what you shouldn’t. If this isn’t already clear, speak with your legal counsel and get a professional’s interpretation of what messages you should deliver to employees. Statements as innocent as “I would suggest you stay the course” or “I’m just sitting this out until things stabilize” could, unfortunately, put you on the wrong side of a participant lawsuit some time down the road. Make sure that everyone who is in either an administrative or fiduciary role knows what they can prudently say. You may want to consider directing participant questions to your provider’s call center. You’re likely already paying for this through your plan fees. Go ahead and take advantage of their services.
- Inertia is a very powerful force. Inertia can create problems when you are trying to get any kind of movement within the plan, whether it’s to get employees to participate at a higher level or to try to get investment mixes changed. But inertia can be a benefit as well. We saw in the downturn of 2008-2009 that inertia kept participation high in retirement plans, despite the market fall and the economic gloom. A relatively low number of investment changes were made by participants during the crash; most
people didn’t “sell low” nor did they decrease their level of contribution. That’s not to say that there won’t be changes in light of the current insanity. Data is already showing calls to providers are significantly up over the last week, as are transactions. However, the movements only reflect a small percentage of participants. - Retirement plans will not be participants’ only concern. At times like these, people worry about their jobs, their mortgages, a spouse’s job. You name it; it might be on an employee’s mind. Be prepared for some personnel issues that you may not be accustomed to. Assuming the company you work for is able to withstand another potential downturn, it may be useful to send out some sort of assurance to employees to help calm their fears.
- Remember history and sound practices. Without falling into the advice trap, you could craft education pieces (or distribute those pieces already prepared by providers) that discuss the importance of diversification, the dangers of trying to time markets, etc. Without a crystal ball, none of us can tell people with 100% certainty that the markets will recover over time, but you can point out basic financial principles that have historically been true. You also might point out that retirement plans are designed to be long-term investments. If you offer age targeted funds in your plan, you can discuss how those are structured to take into account diversification and time to retirement. But, again, keep in mind that caveat about knowing what you should and should not say to remain on the right side of the advice line.
- Keep your fingers crossed. As I start to put together my remarks for our final 2011 programs, September in Las Vegas and October in Chicago, I fully anticipate I’m going to have to change them several times before we open the programs. Regardless of what goes on, we’ll be prepared to discuss what’s gone on and what you should be doing as a plan sponsor. When all is said and done, I’m looking forward to more certainty about the future, diminished volatility, stability in the financial markets and the rest of the world and the threat of a recession ending. At least I’m keeping my fingers crossed.
Until then…please feel free to post your comments, we’d love to hear your thoughts. And keep those fingers crossed!
Mark Friedman
Chairman
Mid-Sized Retirement and Pension Plan Management Conference
Health and Welfare Plan Management for Mid-Sized Employers
Conference
Any opinions expressed are strictly those of the author. The information provided is not legal or tax advice. Such advice should only be obtained through the use of an ERISA attorney or tax advisor.
Welcome to the UCS Chairman’s Blog!
Welcome to our blog!
One of the challenges we’ve faced during the 20 odd years we’ve presented our pension/retirement and healthcare conferences is how we can stay in touch with our attendees during the times when we don’t see you in person. How do we get you information and hear what’s on your minds on a more frequent basis?
Now, through the wonders of modern technology, I have the privilege of bringing you a “blog,” a two-way channel that gives us the opportunity to communicate when you are at your “day job” and not visiting with us at a conference. Just as importantly, the blog lets us hear back from you. We look forward to learning your thoughts, insights and ideas as you participate with us in this new world of social media. I am extremely excited by the possibilities this opens!
What will the blog consist of? I’m planning on a wide variety of discussions, with new posts on a regular basis. Some posts will be on specific topics, such as a discussion of the new fee regulations and its impact on plan sponsors and participants. Others will be more broad-based discussions, such as the one I will be posting in a few days relating to whether retirement and healthcare programs are still viewed as benefits, or if they are just being viewed as costs and entitlements. (During that post, we’ll also look at whether there might be a significant difference between how the HR/benefits folks view the value of these programs versus the perception a CFO or CEO may have today, and also explore what employee perception of these plans is today.)
The primary focus for blog posts will be either retirement plans or health/welfare plans, although I may stray into other issues involving human resources occasionally as well. The topics will be targeted towards the same audience that our conferences focus on, namely small to mid-sized employers. Suggestions for discussion topics are very welcome. I also plan to have “guest bloggers”– experts in the benefits field who we have come to know during the years.
As the Chairman of our conferences, I’ve been very fortunate to be able to speak with thousands of participants throughout the years. We’ve heard about many issues that people would like to discuss beyond a keynote or workshop session. These can and will be addressed through the blog.
The blog will be “moderated,” but only to make sure posts follow several basic ground rules:
- First, this is not designed as a political forum. If I do my job right, you’ll never know if I lean right, left, up or down; and we would like responses to be structured the same way. (There are many topics, such as healthcare
reform, that often lead to political discussions. We’d like to keep our discussions here on the issues themselves, not the fights that surround them.) - Second, we do not want this to be a forum that is sales oriented, i.e. it’s not made to be endorsements for any individual company. Similarly we don’t want it to be a forum for griping about any individual company.
- Finally, we want the posts to be clean—no obscenity, please.
We reserve the right to edit or strike a post if it is in violation of these rules, or otherwise, at our discretion. We intend for this to be an open forum, but want to ensure that it stays strictly professional.
As any of you who have attended our programs know, one of the things we strongly believe is that an important component of learning is networking with other plan sponsors/employers. I view this blog as an extension to the networking component we have at the on-site programs and am looking forward to see how this progresses. Stay tuned, the first benefits-oriented post will be out in a few days. Please chime in with your feelings and be an active participant. The more the merrier!
I look forward to blogging with you and, of course, seeing you in person at a conference soon.
Mark Friedman
